Solar Panel Breakthrough
The question
The market for solar panels is initially in equilibrium. A technological breakthrough allows manufacturers to produce each panel using fewer resources. Show the effect of this change on the market for solar panels, assuming all else is held constant. Show the effect on the Supply and Demand graph.
Drag a curve, or use the arrow buttons. Want the free-play version with every control? Open this graph in the sandbox.
Solar Panel Breakthrough: the worked answer
On the Supply and Demand graph, Supply shifts right.
Why Supply shifts right
Improved technology lowers the per-unit cost of production, which is a determinant of supply. Producers are now willing and able to offer more panels at every price, so the supply curve shifts to the right. Consumer incomes, tastes, and the prices of related goods are unchanged, so the demand curve does not move.
What happens to the equilibrium
The equilibrium price of solar panels falls and the equilibrium quantity increases.
The mistake students make on this one
Students very often shift demand right as well, saying that cheaper panels make people buy more. A fall in the good's own price never shifts its demand curve; it produces an increase in quantity demanded, a slide down the existing demand curve to the new intersection.
On exam day
Write the phrase "increase in quantity demanded" on your answer whenever the good's own price changes; reserve the words "increase in demand" for income, tastes, related-good prices, expectations, and the number of buyers.
How this is graded
The checker reads every curve's position before and after your answer. You are marked correct only when Supply shifts right and every other curve on the Supply and Demand graph stays where it started — the same standard an AP reader applies to a drawn graph: the right shift, and nothing extra. There is no AI involved; the rubric is the geometry.
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